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Monitoring Asset Encumbrance: The Case of Major Italian Banks

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  • Danilo Drago

Abstract

The increasing use of collateral to support a wide range of payment obligations in financial markets has led to higher bank asset encumbrance. Understandably the consequences for financial stability have been, so far, the most investigated issues of increased asset encumbrance. We argue that the investigation of the microeconomic aspects contributes to a better understanding of the macro issues. To this end, we develop some financial indicators that make it possible to organize the information disclosed by banks in their Pillar III document. We document a wide dispersion of asset encumbrance ratio and type of encumbered assets across different banking groups.

Suggested Citation

  • Danilo Drago, 2022. "Monitoring Asset Encumbrance: The Case of Major Italian Banks," Banca Impresa Società, Società editrice il Mulino, issue 3, pages 327-353.
  • Handle: RePEc:mul:jqmthn:doi:10.1435/105851:y:2022:i:3:p:327-353
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